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PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
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17 May 2019
Wayne Sanderson
+61 3 8633 9930
Recommendation Hold
Risk Rating
High
12-mth Target Price (AUD) $0.18
Share Price (AUD) $0.115
12-mth Price Range $0.105 - $0.22
Forecast 12-mth Capital Growth 56.5%
Forecast 12-mth Dividend Yield 0.0%
12-mth Total Shareholder Return 56.5%
Market cap ($m) 51.0
Net debt (net cash) ($m)(June 19e) 26.6
Enterprise Value ($m) 77.6
Gearing (Net Debt/ Equity) 27%
Shares on Issue (m) 443.3
Sector Food & Beverages
Average Daily Value Traded ($) $34,000
ASX 300 Weight n/a
Financial Forecasts & Valuation Metrics
BFC SHARE PRICE PERFORMANCE
Years ending June $m 17(a) 18(a) 19(e) 20(e) 21(e)
Sales revenue 23.8 47.9 97.7 121.7 138.5
EBITDA -9.7 -11.6 -7.0 3.2 12.1
NPAT (rep'd Incl. NRIs) -7.7 -12.6 -13.0 -0.7 5.2
NPAT (normalised) -7.7 -8.8 -7.1 -0.7 5.2
EPS (norm) (cents) -1.8 -2.0 -1.6 -0.2 1.2
EPS growth 237% 9% -19% -90% Large
DPS (cents) 0.6 0.0 0.0 0.0 0.0
P/E -6.3 -5.8 -7.2 -68.4 9.8
EV / Ebitda -2.3 -5.9 -11.1 26.3 7.0
Yield 5.2% 0.0% 0.0% 0.0% 0.0%
Net debt / equity net cash 14.0% 27.1% 34.9% 32.3%
Source: Phillip Capital estimates
Summary
We visited BFC’s 100% owned Provincial Foods Group operation at Shepparton recently. We also spent time with the new CEO Jonathan Hicks and some of the senior BFC team on site.
1. Dairy (80% of estimated segment assets) – Two
recently refurbished and upgraded cheese factories at
Murray Bridge and Jervois in South Australia (300 million
litres milk processing capacity), plus four dairy farms near
Mt Gambier SA (~17m litres annual production).
2. Provincial Food Group (9% of segment assets, now
100% owned) – Specialist provider of pre-cooked meat
products to supermarkets, food service and exports, based
at Shepparton Vic. Significant new business recently won.
3. China Division – Shanghai trading office (6 staff).
4. Associates & Incubator investments (9% of assets):
-Seafood $10.6m book value (Ferguson Australia)
-Health BV$4.7m (mineral water) & Beston Technologies
1H19 Result & looking ahead
Revenue $43.3m up 136% as mozzarella sales ramp up.
Dairy EBIT loss -$1.6m; Meat division EBIT loss -$1.3m.
NLoss (normalised) -$5.5m.
BFC has now found sufficient new customers that it is now processing nearly all of its contracted milk intake (in 1H19 nearly half the milk was traded out at nil margin).
Three major new customers with annualised $10m of new business in the Meat division.
Cost savings of $2.0m plus already identified and being implemented, by June 30. We expect there is more to come.
2 to 5 year turnaround now well underway. Non-core businesses to be dealt with. Significant improvement in operations now coming through. Other matters including corporate structure are on the table. No sacred cows.
Book value 22.5 cents. Price to book 0.5x Vs Bega Cheese (BGA) 1.3x and sector median 2.4x. NTA 16.3 cents.
Net debt $31m; Gearing 31%. Asset disposals coming.
Our Opinion
Management has taken decisive action to clear the decks and point BFC towards profitability. Some very good progress is being made despite the poor headlines.
We think there is a good base for the new CEO to add value to. Whilst there is considerable work still to be done, change is happening. Investors should pay attention.
We see significant re-rating potential post the June 2019 audited accounts and planned disposals. Our Sum of the Parts valuation is 18 cents. BFC is an undervalued agri-food asset play for patient investors.
Beston Global Food Co Limited (BFC) A day with the new CEO - Site visit to Shepparton Meat Division
Provincial Food Group
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
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Provincial Food Group – site visit to Shepparton We visited BFC’s Meat division at Shepparton on 1st May - the Provincial Food Group (PFG), and spent several hours with the new CEO Jonathan Hicks, and three senior managers of the company.
Left to right: Hamish Browning COO, Wayne, Enzo, Jonathan Hicks CEO
History
The business was founded approximately 40 years ago as Scorpio Meats and was acquired by the Paterson family in 2008.
BFC acquired a 45% indirect interest via convertible notes for $2.4m as one of several investments made at the time of BFC’s IPO in 2015.
A major restructure of Scorpio Foods was announced in February 2018, with Colac and Dandenong operations being consolidated into one location at Shepparton, and BFC moving to 100% ownership and control. This was completed in August 2018 by redemption of the two convertible notes. BFC also purchased the freehold premises at Shepparton for $6.0m. The total book value of the division is now $15.7m as December 2018 (Vs $2.8m at June 2018 when 45% indirectly owned). The business name was also changed to Provincial Food Group.
The Shepparton operation is a former cold storage facility which has been significantly upgraded in the last 14 months to SQF and export grade. It now includes four food preparation rooms (important to keep meat and vegetarian/ vegan operations separate) and extensive cold rooms and blast chiller rooms.
We understand that sales in FY18 under previous ownership were approximately $8m. The major customer for this business historically has been “dice and grind” of meat products for Campbells Soups which is located about 300m around the corner. This customer accounted for approximately 80% of the business historically. A long-term contract is in place with this customer. Other customers include quick service restaurants (QSRs), fine dining, cafes, wholesale food customers and major Australian and international retailers and supermarkets (including Aldi & Costco).
With the February interim results, BFC announced contracts with three new customers and associated orders of close to $10m in annualised sales, representing a significant part of the subsidiary’s forward sales budget. The new orders are for the supply of gourmet burgers and other quick meal products (pre-cooked, ready to heat) for domestic and international markets.
Site Visit:
The exterior of the building was modest (a large white colorbond factory) with a converted low set brown brick house serving as the offices, meeting room and staff room. No signage as the new PFG signs have not yet been installed (we drove past it 3 times). Machinery inside was modern and impressive – lots of stainless steel, huge refrigeration and blast chillers and some specialised product forming, shaping and
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
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packaging machines (with more to be installed imminently). There was some remaining construction activity underway between shifts to establish another food prep room for new customers / new products.
We met with Jonathan Hicks the new CEO of BFC, Hamish Browning COO, Luke Bramston General Manager of PFG, and Thomas Paterson Sales director (and son of the former owners).
PFG acquires pre-butchered meat cuts from multiple Australian suppliers. In the last 12-months PFG has used a single external meat buyer which has improved quality. Volumes vary between 20-100 tonnes per week. Meat for soups is a very reliable but low growth category. Obviously seasonal to the winter months.
Core strengths are portion control, “sous vide” cooking (cooking in a plastic pouch or glass vessels for longer than usual cooking times at an accurately regulated temperature), flexibility to handle different volumes, halal, and now specialised packaging and new product development (see further below).
Volumes picking up with orders from 2 of the 3 new customers now ramping up, and the 3rd to commence as soon as new specialised packaging equipment gets installed (expected within 3 weeks of our visit). PFG now running two shifts per day x 6 days per week. Approximately 25 staff on site per shift (mainly casuals), plus 5 managerial & quality assurance.
New products – We saw a number of promising new products (meat and non-meat) for existing and new customers. Management was convincingly optimistic and enthusiastic about the prospects here.
PFG is exploring interesting co-branding possibilities to help well established brands extend into new, non-traditional categories. PFG sees an exciting growth path in helping other companies with new product innovations, noting that BFC is uniquely placed to provide both meat and dairy ingredients. PFG says it has no shortage of new customers approaching it for its increased and improved capabilities.
Brands – PFG has two brands of its own currently – “Yarra Valley Wholesale Meats” and “5026” which is PFG’s Australian food manufacturing licence number which is being used on exports to Asia where this very precise branding is valued and readily understood. PFG is very happy to make own label products for its customers to build volumes, and to leverage the strong more established brands of others. Further development of its own brands can come later.
Factory efficiency – We saw a few examples of manual processes and double handling, which management said would be streamlined with new equipment and improved processes as volumes increased and new products were optimised.
Financials - PFG
After a weak first half, we are conservatively forecasting sales of $6.0m for FY19 (10 months) so $7.2m annualised, rising to $16.0m in FY20 and $17.0m in FY21 as the major new customer contracts kick in.
We are still forecasting a loss for FY19, as there will be set up costs and inefficiencies in 2H19 for the new contracts and new products. Once these ramp up and production can be streamlined, we expect EBIT margins of 9-10% are achievable. We forecast a $0.6m profit in FY20 and $1.6m in FY21.
Provincial Food Group - Forecasts FY18 1H19 2H19e FY19e FY20e FY21e
Years ended June $m (4 mths) (6 mths) (10 months)
Revenue N/a 1.5 4.5 6.0 16.0 17.0
EBIT N/a -1.3 -0.8 -2.1 0.6 1.6
EBIT margin -85.6% -18.4% -35.1% 3.8% 9.5%
Book value 2.7 15.7 15.7 15.7 15.7 15.7
Return on Assets -16.3% -10.6% -13.4% 3.9% 10.3%
Ownership 45% indirect 100% 100% 100%
Source: BFC reports; Phillip Capital estimates
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
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Other BFC discussions New CEO Jonathan Hicks had 13 years of experience at Bega Foods Group (BGA). In
that period, BGA was transformed to a much more efficient and larger operation. The share price went from $2.00 per share at IPO in August 2011 to $5.05 now. Jonathan sees a number of parallels to the current position of BFC.
In mozzarella, there are only three producers of any scale in Australia – Fonterra (Stanhope, northern Victoria), Saputo (Warrnambool) and BFC (Jervois, South Australia). As the new market entrant, BFC has flexibility and capacity that the others probably don’t have. BFC sees plenty of opportunity to build this business, but it will take time.
BFC is gradually adding new customers, both domestically and through its agent internationally.
The 4 dairy farms in South Australia are a “tremendous asset”. These have been turned around from a loss of $3m to a profit of $1.2m (not currently visible, as the farms sit within the larger Dairy division). On farm production of fodder / silage has increased three-fold, despite the drought conditions elsewhere. BFC farms are in a very good area. This has enabled an increase in the dairy herd, to “right-size” the operation.
In 1H19, BFC traded out a sizeable portion of its milk intake to competitors at nil margin. It now using almost all of its milk for its own production and is working to further increase its milk intake going forward. The change to processing nearly all of its milk supply in its own factories shows that BFC has been growing its customer base, which will dramatically improve Dairy Division margins.
BFC now only manufactures to firm customer orders. It does not stockpile and hope to find a customer later.
BFC has worked hard to retain farmers’ supply of milk, given strong competition. We hope that farmers continue to show loyalty to BFC to help it become an established, profitable and sustainable local processor.
Costs – In the interim results, BFC stated that $1.0m of annualised savings had been implemented in 1H19, and that a “full, top to bottom commercial and HR review” commissioned by the new CEO had found a further $1.0m plus of identified savings. This is being pursued as a matter of urgency to be completed before June 30, including necessary headcount reductions in Australia and overseas.
Jonathan also emphasised to us that all core businesses were now being managed by a strong team of very experienced operational people.
Non-core businesses. BFC is not happy with the lack of progress made by the advisors handling the Ferguson Seafood business sale, which is planned to also include BFC’s lobster licences which are leased to Ferguson. BFC is seeking to have more say in this process with the other owners, to achieve a satisfactory sale outcome. BFC is very comfortable on the carrying value of its lobster licences.
The minority ownership of the water business has been restructured (BFC 51%, AN Other 49%) which was an impediment to change previously. Further progress underway to fix this business and make it saleable.
Other matters and group structure – After 3 years and $42m of establishment losses and write-downs on unsuccessful business investments, the new CEO has been given a clear mandate to fix the company and to take the necessary steps to achieve profitability and growth. BFC says that everything is on the table and open for scrutiny, and that nothing is sacred. Further divestments of non-core businesses should be expected.
The turnaround and re-positioning of the company could take 2-5 years, but the prize is worth it – as evidenced by what Bega Cheese (BGA) has achieved.
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
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Outlook & Profit Improvement items BFC management has listed or highlighted to us in discussions a large number of profit improvement items that should progressively improve gross margins and EBIT margins.
New CEO with significant experience in Dairy industry commenced 7/1/19.
Recruitment of new salaried sales personnel with extensive experience in FMCG, replacing several contracted third party providers.
Meat division – 3 new large customer contracts for close to $10m annualised (We assume a gradual ramp up). Additional specialised equipment acquired from overseas for this.
Dairy –increased tender activity; Freeze dryer installed and Lactoferrin plant accredited 30/1/19 and now selling a new high margin product (customers have been waiting for it). Increase in Dairy cow herd (320 additional cows acquired, ~+10%).
$2.0m+ of cost savings identified. Medium term items:
Planned $6m investment to bring cheese cutting, packing and shredding back in-house (target completion Q4 of FY20). This should reduce external processing costs ($3.1m pa), transport costs and wastage, improve packaging flexibility and provide BFC with total control of the final product supplied to consumers.
Introduction of solar energy based solutions at the 2 dairy plants (electricity and gas are the largest operating cost items).
Introduction of trade waste recycling and treatment at Murray Bridge.
Further expansion of dairy nutraceutical capabilities (eg Immunoglobin and Lactoperoxidase).
Catalysts
We think BFC shares are undervalued, and identify the following possible catalysts:
Exit from Seafood (Book value $10.6m).
Exit from Health / Water (Book value $4.7m), Beston Technologies (book value unknown) or write-down.
New customer wins in Dairy & Meat to improve capacity utilisation and diversify customer risk.
Confirmation of a significant improvement in Dairy margins now that customer demand and milk intake / supply are back in balance.
Further information on new “centre of plate” food products under development at PFG.
Reduction in costs and group overheads.
Eliminate unpopular external management structure.
FY19 audited accounts should show a significant improvement in performance from a 1H19 normalised NLoss to a more modest $1.6m NLoss in 2H19.
However we expect abnormal restructuring charges for necessary headcount reductions, and possibly a write-down of the water business.
In the medium term:
We forecast a small loss of $0.7m in FY20 as it takes time to turn a ship.
A clean reported NPAT in FY21 with no abnormals.
Further growth initiatives, JVs, production sharing, and even synergistic acquisitions.
Resumption of dividends.
Board renewal.
Create a new accounting segment for BFC dairy farms, so investors can see the performance of that operation too (we believe it is already profitable, assuming arm’s length transfer pricing to the cheese manufacturing business).
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
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Forecasts Our forecasts are unchanged, shown in detail below.
BFC - Forecasts
Year end June $m 1H18 2H18 FY18 1H19A 2H19e FY19e FY20e FY21e
Operating Revenue 18.3 29.5 47.9 43.3 54.5 97.7 121.7 138.5
Cost of Goods Sold -11.5 -21.2 -32.7 -33.9 -38.4 -72.3 -85.9 -93.3
Gross Profit 6.8 8.4 15.2 9.4 16.1 25.5 35.7 45.2
Gross margin 37.3% 28.4% 31.8% 21.8% 29.5% 26.1% 29.4% 32.7%
-Other Revenue Total 2.4 0.8 3.2 0.6 1.0 1.6 1.2 1.2
Operating Expenses -12.2 -17.8 -30.0 -16.7 -12.8 -29.5 -29.6 -30.2
Ebitda -3.0 -8.6 -11.6 -6.6 -0.3 -7.0 3.2 12.1
Ebitda Margin -16.2% -29.3% -24.3% -15.3% -0.6% -7.1% 2.7% 8.7%
Ebitda Growth -45% 102% 19% 124% -96% -40% -146% 273%
Depn & Amort -0.9 -1.1 -2.1 -0.9 -1.1 -2.0 -2.5 -2.6
Ebit -3.9 -9.8 -13.7 -7.5 -1.5 -9.0 0.7 9.4
Ebit Margin -21.3% -33.1% -28.6% -17.3% -2.7% -9.2% 0.6% 6.8%
Net Interest income (expense) 0.4 0.5 1.0 -0.5 -0.7 -1.2 -1.8 -2.0
Share of Associates' NPAT -0.02 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Pre-tax profit -3.5 -9.2 -12.7 -8.0 -2.1 -10.2 -1.1 7.4
Income Tax Credit (Expense) 0.5 3.0 3.4 2.4 0.6 3.0 0.3 -2.2
Tax Rate 13% 32% 27% 30% 29% 30% 30% 30%
Minorities (share of loss) 0.1 0.4 0.5 0.1 -0.1 0.0 0.0 0.0
Abnormals 0.0 -3.8 -3.8 -5.9 0.0 -5.9 0.0 0.0
NPAT (reported incl Abs) -3.0 -9.6 -12.6 -11.4 -1.6 -13.0 -0.7 5.2
Adjustments 0.0 3.8 3.8 5.9 0.0 5.9 0.0 0.0
NPAT (normalised) -3.0 -5.9 -8.8 -5.5 -1.6 -7.1 -0.7 5.2
EPS (adjusted)(cents) -0.7 -1.3 -1.988 -1.2 -0.4 -1.605 -0.168 1.175
DPS (cents) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Franking 0% 0% 0% 0% 0% 0% 0% 0%
GROWTH RATES
Operating Revenue 136% 84% 104% 24% 14%
Gross Profit 38% 92% 68% 40% 26%
Ebitda 124% -96% -40% -146% 273%
EBIT 92% -85% -34% -108% 1184%
NPAT (normalised) 87% -73% -19% -90% -799%
EPS (normalised) 87% -73% -19% -90% -799%
SEGMENTALS
Segment Revenue
Dairy 18.2 26.5 44.7 41.9 49.9 91.8 105.3 121.1
Meat 0.1 0.8 0.9 1.6 4.5 6.1 16.0 17.0
Seafood 0.2 0.5 0.7 0.2 0.2 0.4 0.3 0.3
Health 0.5 0.5 1.0 0.1 0.1 0.2 0.4 0.4
Unallocated/ Other 1.7 3.1 4.7 0.1 -0.1 0.0 0.0 0.0
Total Sales + Other Rev 20.7 31.3 52.0 43.9 54.6 98.5 122.0 138.8
Segment EBIT
Dairy 1.1 -4.2 -3.0 -1.6 3.0 1.3 7.3 15.0
Meat 0.0 0.1 0.1 -1.3 -0.8 -2.1 0.6 1.6
Seafood 0.1 0.4 0.4 0.2 0.2 0.4 0.3 0.3
Health -1.0 0.2 -0.8 -0.1 0.0 -0.1 0.0 0.0
Unallocated/ Other -4.1 -6.2 -10.3 -4.8 -3.7 -8.5 -7.5 -7.5
Abnormals 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total EBIT -3.9 -9.8 -13.7 -7.5 -1.5 -9.0 0.7 9.4
Segment Margins
Dairy 6.2% -15.8% -6.8% -3.9% 5.9% 1.5% 7.0% 12.4%
Meat 3.5% 6.9% 6.4% -81.1% -18.4% -34.6% 3.8% 9.5%
Seafood 35.0% 73.1% 61.6% 98.8% 101.9% 100.0% 100.0% 100.0%
Health -210.7% 35.6% -81.7% -73.0% -10.8% -50.0% 0.0% 0.0%
Unallocated/ Other N/a N/a N/a N/a N/a N/a N/a N/a
Abnormals N/a N/a N/a N/a N/a N/a N/a N/a
Total EBIT margin -18.8% -31.2% -26.3% -17.1% -2.7% -9.1% 0.6% 6.8%
Source: Company for actuals; Phillip Capital forecasts
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
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Valuation & Recommendation
BFC looks very expensive on near term Price to Earnings (P/E) and Enterprise Value (EV) to Sales and EV to Ebitda multiples, compared to other food manufacturing stocks (shown below in descending order of Revenue), as BFC’s dairy division is still in an early ramp up phase, and several of its investee companies are in loss. Therefore, an earnings based valuation is not appropriate at this stage.
BFC shares start to look good value in FY21 on our earnings estimates (light blue shaded row below).
On an asset value basis, BFC shares look good value, trading at a 26% discount to the $0.163 NTA (net tangible assets) at end-December 2018. Further, management believes the Dairy assets (cheese factories and the four dairy farms) were acquired at prices well below their replacement cost.
Sum of the Parts Valuation We have prepared a sum of the parts asset valuation, based on the segment book values and making certain adjustments (no change since our report dated 27 March 2019).
We think a higher valuation for the Dairy assets is justifiable, based on the earnings potential of the two cheese plants in 3 years time, and the fact that BFC acquired the 3 principal assets under forced sale circumstances (Murray Bridge & Jervois for $4.5m from the receivers, and the Lactoferrin plant ($7m) – all non-operating at the time. The 4 dairy farms were also acquired cheaply. We apply a conservative 7.5 times our FY21 Ebitda forecast for Dairy.
However, we make several adjustments to reduce our valuation on loss-making investee companies, to be more conservative.
We also allow $2.0m for BFC to exercise the option over the 80% interest in the Brandlok company which owns the core IP for BFC’s Oziris track and trace technology.
We allow $2.9m for a possible buy-out of the BPAM management agreement.
And we exclude a number of intangible items and subtract a provision for a $2.6m long term debtor, all to be more conservative.
We value BFC shares at $0.241 per share on our sum of the parts basis, in three years’ time. Discounting this back to today (10% discount rate) produces a valuation today of around $0.18 per share.
Obviously there are many moving parts, in Dairy and in the investee companies, as BFC executes on its profit improvement strategy. Above average execution risk here, as it is still early days for these businesses.
Price to Book We note that Bega Cheese (BGA) trades on a price to book multiple of 1.3x, and the median for
all food companies above is 2.4x. We think BFC looks cheap at just 0.5x December 2018 book value. There may be some downside risk to book value from further write-downs at June 30, but we think BFC is close to the bottom.
We can see significant re-rating potential into FY20 and FY21 as the restructuring and cost cutting bear fruit, and as new customer wins in Dairy & Meat divisions build revenues and improves the utilisation of BFC’s fixed infrastructure base – which is currently very under-utilised.
Other initiatives by the new CEO and his management team could add further value.
We maintain our 12-month price target at $0.18 per share.
Stocks Price Market Revenue Price EV/ Sales Ebitda P/E P/E P/E EPS EPS EPS PEG PEG EV/Ebitda EV/Ebitda
(in order of revenue) 15/5/19 Cap FY18 to Book Last Margin Growth Growth Growth
$m $m FY18 12mths FY19e FY19e FY20e FY21e FY19e FY20e FY21e FY19e FY20e FY19e FY20e
FONTERRA CO-OP (FCG.NZ) 4.230$ 6,819 20,438 1.1x 0.7x 6.5% 24.0x 14.2x 11.3x -27% 69% 26% -0.9x 0.2x 10.8x 9.2x
INGHAMS (ING.AX) 4.410$ 1,639 2,374 9.0x 0.8x 8.7% 15.6x 14.6x 13.9x -5% 7% 5% -2.9x 2.2x 8.8x 8.4x
BEGA CHEESE (BGA.AX) 4.950$ 1,058 1,438 1.3x 1.1x 7.3% 23.3x 17.8x 15.3x -11% 31% 17% -2.1x 0.6x 12.4x 10.3x
A2 MILK (ATM.NZ)(A2M.AX) 16.300$ 11,345 922 18.6x 10.3x 32.0% 41.5x 32.8x 26.5x 49% 26% 24% 0.8x 1.2x 27.9x 22.4x
SYNLAIT MILK (SML.NZ)(SM1.AX) 10.200$ 1,828 879 3.9x 2.3x 15.8% 20.8x 16.9x 13.8x 18% 23% 23% 1.2x 0.7x 13.1x 10.1x
BLACKMORES (BKL) 89.480$ 1,554 602 7.4x 2.5x 14.2% 25.4x 23.0x 19.9x -13% 11% 16% -1.9x 2.2x 16.4x 14.4x
TASSAL GROUP (TGR) 4.740$ 846 499 1.4x 1.8x 20.4% 14.8x 13.2x 12.0x 11% 12% 10% 1.4x 1.1x 8.1x 7.1x
FREEDOM FOODS (FNP) 4.940$ 1,214 353 2.3x 3.4x 11.7% 54.9x 29.2x 19.8x 43% 88% 48% 1.3x 0.3x 24.0x 15.2x
BELLAMYS AUSTRALIA (BAL) 9.470$ 1,074 329 4.9x 3.4x 19.0% 31.0x 23.6x 19.0x -25% 31% 24% -1.2x 0.8x 17.9x 13.4x
FARM PRIDE FOODS (FRM) 0.210$ 11.6 85.6 0.3x 0.3x 5.2%
CLOVER CORP (CLV) 2.320$ 383.2 63.0 9.4x 5.5x 18.5% 43.7x 36.5x 28.6x 26% 20% 28% 165% 187% 29.4x 24.6x
THE FOOD REVOLUTION GROUP 0.092$ 46.3 33.1 2.3x 1.7x 13.7%
Loss makers (difficult to value accurately):
BESTON GLOBAL FOODS (BFC) 0.120$ 51.3 47.9 0.5x 1.7x -7.2% -7.5x -71.4x 10.2x -11.4x 25.0x
BUBS AUSTRALIA (BUB) 1.330$ 677.8 16.9 8.9x 19.5x 0.0% 1330.0x 88.7x 159.3x
LONGTABLE GROUP (LON) 0.200$ 40.4 8.6 0.4x 1.9x -67.7%
WATTLE HEALTH AUST (WHA) 0.735$ 143.0 1.6 2.5x 79.3x -1359.5%
Median (excluding loss makers) 2.4 2.0x 13.9% 24.7x 20.4x 17.1x -5% 26% 23% 0.0x 0.9x 14.7x 11.9x
Average (excluding loss makers) 4.6 2.8x 14.4% 29.5x 22.2x 18.0x 4% 33% 21% -0.3x 1.1x 16.9x 13.5x
Source: Phillip Capital estimates for BFC & CLV; Thomson Reuters for all others.
A2 Milk & Synlait Milk in NZ$; Ebitda margins are for FY19e, but for FRM FOD LON & WHA we use FY18A as there are no forecasts
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
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BFC: Sum of the Parts Valuation Net Book Per BFC Alternative Per BFC
Value $m Share Valuation Share
at 31/12/18
Dairy 97.7 0.220$
- 2 factories + Lactoferrin plant + 4 farms acquired in bargain circumstances.
- We value at 7.5x FY21 estimated EBITDA of $17.2m 128.9 0.291$
Meat 12.9 0.029$
- Now 100% of Provincial Food Group (was 45%)
- Has been restructured, & 45% indirect interest converted
to 100% at no extra cost. Has $6.0m freehold property & $6.2m of goodwill.
- Has 1 very large customer at 80% before recent ~$10m new orders fm new customers
- Business still in loss & not yet proven. Allow 25% deduction on BV 9.7 0.022$
Seafood 10.6 0.024$
- 32% stake in Ferguson + $5.0m lobster licences
- Founders & BFC have commenced a sale process & confident of > book value
- Business appears to have made a small loss in FY18 (BFC share -$22k)
- Allow 10% less to cover legals & selling costs, to be conservative 9.5 0.021$
Health 3.7 0.008$
- 9.9% stake in Neptune Bio $5.7m + $5.9m convertible note was $11.6m
Now written down to zero 0.0 0.0
- 51% stake in Aqua Essence mineral water & Other stock. BV $3.7m.
- Potential value in the water licence, but who would buy it? Value at 10% of BV. 0.4 0.001$
Unallocated -25.2 0.057-$
- Includes China office which has incurred losses; and Group debt
- Group Net Debt -31.3 0.071-$
Other Adjustments
- Long term debtor $2.588m re China - Allow 50% provision -1.3 0.003-$
- Allowance to buy out Grape Ensemble re Beston Technologies -2.0 0.005-$
- Allowance to buy out BPAM external mgt agreement. Use termination fee of 5.0%
of "fair market value". We use current market cap of $57.6m. -2.9 0.006-$
Book Value per 31/12/18 Balance Sheet 99.7 0.225$
Less: Intangible items at 30/6/18
Goodwill on Provincial Foods Group -6.3 0.014-$
- We have already allowed -$3.2m reduction in Item 2 above
Goodwill (Cream Cheese & others) -1.8 0.004-$ -1.8 0.004-$
Internally generated software -1.7 0.004-$ -1.7 0.004-$
Customer contracts -0.8 0.002-$ -0.8 0.002-$
- Impossible to assess the value of the 3 above, so we will deduct all
Water licences -4.0 0.009-$
- Should be OK to include in valuation
Deferred tax asset at 31/12/18 -12.9 0.029-$
- Valuable only if BFC becomes profitable, to utilise. Accept for now.
Total intangibles -27.6 0.062-$
Net Tangible Assets 72.1 0.163$
Alternative Valuation 106.6 0.241$
Shares on issue 443.3
NPV 80.1 0.181$
Source: FY18 Annual Report; FY19 interims; Phillip Capital adjustments
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
Page 9
Description of Businesses
BFC listed in August 2015 as an investment company to hold selected investments in the Australian food and beverage industry, and with a particular focus on products suitable for export to China and South East Asia. Today the BFC investment portfolio has three wholly owned businesses, and 4 investment positions in investee / incubator companies:
Dairy (82% of segment assets)
Two recently refurbished and upgraded cheese factories at Murray Bridge (cheddar and other hard
cheeses) and Jervois (mozzarella) in South Australia. These have a combined 300 million litres
annual milk processing capacity, but are currently operating at about one third of that. These factories
were purchased out of receivership in 2015 for $4.5m, before an extensive refurbishment, reopening
in December 2015. A new $26.5m mozzarella line installed at Jervois, commenced production in
February 2018 and full production in May 2018. Estimated capacity 10,000 tonnes pa at Murray
Bridge and 16,000 tonnes pa at Jervois.
Cream cheese processing and packing facility (acquired for $2.2m and relocated from Thomastown
Melbourne to Murray Bridge, and refurbished and upgraded).
Contract manufacturing facility eg “Le Rice” dairy desserts for Lion Nathan.
Lactoferrin extraction plant – located at Jervois, but acquired separately in 2015 for $7.0m from
Probiotec (PBP). PBP installed the plant here in 2012 at a cost of $22.0m after relocating it from
Malanda Queensland. This plant has been idle for over 3 years, restarted in February 2019 to process
whey from the mozz plant into high value proteins for infant formula and pharmaceuticals.
Four dairy farms in the Mt Gambier region of South Australia, with approximately 3,470 dairy cows
and expected annual milk production of around 17m litres. Kurleah (314 hectares, located at Allendale
East, 30klms south from Mt Gambier), cost $7.2m including livestock, plant and equipment; and Pedra
Branca (3 farms totalling 1,229 hectares, 20 klms south of Mt Gambier). Cost $19.2m including
livestock. BFC also believes these farms were acquired at prices below market value – the Pedra
Branca farms were acquired from the banks out of receivership.
Provincial Food Group (nee Scorpio Foods); 9% of segment assets Specialist provider of pre-cooked meat products to supermarkets, food service and exports,
based at Shepparton Vic.
100% owned since 23/8/18 (previously 45% indirect interest via convertible notes).
Book value $15.1m (including $6.0m building) or about 10% of Total Group Assets.
China Division Shanghai trading office (6 staff). Assists BFC export orders of Dairy and also looks for new
export opportunities for BFC investee companies.
Incubator investments (9% of segment assets)
Seafood $10.6m book value Ferguson Australia – 32.0% equity stake in a third generation seafood company that catches,
processes, packages and distributes live, chilled and frozen seafood (Southern rock lobster and other
seafood delicacies), primarily to customers in China and Asia. Based in Adelaide, with operations at
Kangaroo Island and Port MacDonnell South Australia.
BFC also owns 100% of two Lobster quotas (5.4 tonnes and 4.2 tonnes) and $0.5m of plant and
equipment which are all leased to Ferguson.
Now classified as “Assets held for sale” in the Balance sheet.
Health & Nutrition Products (Segment book value $4.7m) Aqua Essence (51% owned; BV $370k at 30/6/18) - Mineral water business. Owns rights to ~ 140
million litres of water pa sourced from underground aquifers surrounding the Blue Lake in Mt
Gambier.
Neptune Bio-Innovations (9.9% equity stake of $5.7m + $5.9m C/note; BV of $11.6m has now been
written down to nil) - An accredited Research & Development food contract manufacturer operating in
the food and beverage, nutritional, personal care and nutraceutical product industries. Based in
Lidcombe, Sydney.
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
Page 10
Beston Technologies (BV undisclosed)
BFC has an option to purchase an 80% shareholding in Brandlok Protection Solutions Pty Ltd
(BBPS). Data Dot Technology Limited (DDT) owns the other 20%. BBPS has developed an anti-
counterfeiting system, whereby a BrandLok infrared and ultraviolet seal applied to a packaged
product can be read by a consumer at the point of purchase to verify the authenticity of the product,
and other information. The core technology was originally developed by the CSIRO. BFC has funded
further development and applications of the technology to build a track and trace system, and applied
it to some BFC food products. A proposed merger of Beston Technologies and Data Dot was
announced in February 2018, valuing Beston Technologies at $13.0m and DDT at $7.0m, but the
heads of agreement was terminated in August.
Management Agreement BFC has an external management structure, with the senior management team employed by Beston
Pacific Asset Management Pty Ltd (BPAM). BFC pays BPAM a management fee equal to 1.20% per annum (plus GST) of the gross portfolio value of BFC. This was $2.380m in FY17 and $2.422m in FY18.
In addition, there is a performance fee of 17.5% of the out-performance of BFC shares over the All
Ordinaries Accumulation index, subject to a clawback from prior negative years. BFC’s share price
out-performed the benchmark by 16.7% in FY16 (year 1), but BPAM waived the right to receive the
outperformance fee entitlement for that year of $4.351m. There was no performance fee payable for
FY17 or FY18 as BFC’s share price under-performed the benchmark by -58.24% and -35.95%
respectively.
The term of the agreement is 5 years plus an automatic extension for a further 5 years, unless
terminated earlier (under very strict rules summarised in the prospectus p110; eg if the Investment
Manager becomes insolvent). After the initial term, BFC may terminate the management agreement
on 3 months’ notice where an ordinary resolution of the shareholders is passed. A termination fee is
payable to the Investment Manager in that circumstance. The termination fee is 5.0% of the Portfolio
value reduced by one sixtieth for each calendar month elapsed between commencement of the term
(or extended term). Portfolio Value is the “Fair market value of the portfolio at 30 June and 31
December of each year”.
BFC has stated that the “fee paid to BPAM is less than the actual costs incurred by BPAM, which the
fee was intended to cover”.
In the recent Chairman’s AGM statement, the Chairman stated that “BPAM has made it known that at
some point, it would accept the collapsing of this arrangement. However, that point would will be
when it is in the best financial interest of the BFC shareholders to do so.”
We think that collapsing this external agreement would help simplify the company, and so would be
positively viewed by shareholders and investors, subject to the termination fee being calculated (and
possibly negotiated) and the costs and benefits being explained adequately.
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
Page 11
Directors Shareholdings and Substantial Shareholders
Directors shareholdings
BFC was founded by Dr Roger Sexton and Stephen Gerlach in 2015.
BFC has a six person board. The new CEO is not a member of the Board at this stage.
Three directors have bought additional shares post the IPO – Dr Sexton, Ian McPhee and Catherine Cooper which is encouraging.
Substantial Shareholders
BFC has two cornerstone shareholders, Dashang from the IPO at $0.35 per share and Kunteng / DHG from a placement at $0.45 per share.
The relationship with Dashang was intended to be a strategic relationship, with significant orders for BFC products, but no orders were ever received. The relationship with DHG we understand is passive. DHG has assisted with some customer introductions, but nothing significant.
Directors Shareholdings FY16 FY17 FY18 % of Coy
Dr. Roger Sexton, Executive Chairman 17,053,205 17,853,205 18,306,215 4.1%
Stephen Gerlach, NED 3,476,445 3,476,445 3,476,445 0.8%
Petrins Coventry, NED 57,142 57,142 57,142 0.0%
Jim Kouts, NED 142,857 142,857 142,857 0.0%
Ian McPhee (app 7/4/16), NED - 400,000 1,000,000 0.2%
Catherine Cooper (app 7/9/16), NED - 175,000 355,000 0.1%
Don Taylor (resigned 7/4/16) NED -
Total 20,729,649 22,104,649 23,337,659 5.3%
Changes in Directors' shareholdings
Dr. Roger Sexton, Exec. Chairman 17,053,205 800,000 453,010
Stephen Gerlach 3,476,445 - -
Petrins Coventry 57,142 - -
Jim Kouts 142,857 - -
Ian McPhee - 400,000 600,000
Catherine Cooper - 175,000 180,000
Don Taylor (resigned 7/4/16) - - -
Source: BKL FY08 Annual Report; FY16 holdings include founders options
Major Shareholders No. % Comment
Australia Aulong Auniu Wang Food Holdings Pty Ltd 66,894,345 15.09% Acquired at IPO at 35 c (A$23.4m)
(Dashang Group Co. Ltd)
Kunteng Pte Ltd (Singapore based subsidiary 64,051,111 14.45% Acquired in a placement on 31/8/16 at $0.45 per share (A$28.3m)
of Dalian Hairunlai Group "DHG")
I.G. Investment Management Ltd 39,525,741 8.92%
Allianz SE 21,955,164 4.95%
Total as At 23/9/18 443,315,867 100.00%
Source: BFC Annual Report
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
Page 12
Beston Global Food Company Limited (BFC) 0.115$
Profit & Loss Per share & Ratio data
Year end June FY18 FY19e FY20e FY21e Year end June FY18 FY19e FY20e FY21e
A$m A$m A$m A$m Reported EPS (cents) (2.8) (2.9) (0.2) 1.2
Op. Revenue 47.9 97.7 121.7 138.5 Growth 56.0% 3.3% -94.3% -799.5%
Cost of Goods Sold (32.7) (72.3) (85.9) (93.3) P/E ratio (x) -4.0x -3.9x -68.4x 9.8x
Gross Profit 15.2 25.5 35.7 45.2 EPS (norm)(cents) (2.0) (1.6) (0.2) 1.2
Gross Profit Margin 31.8% 26.1% 29.4% 32.7% Growth 9.2% -19.3% -89.5% -799.5%
P/E ratio (x) -5.8x -7.2x -68.4x 9.8x
Other Income 3.2 1.6 1.2 1.2
Cash Operating Expenses (30.0) (29.5) (29.6) (30.2) DPS (cents) 0.0 0.0 0.0 0.0
EBITDA -11.6 -7.0 3.2 12.1 Franking 0% 0% 0% 0%
Ebitda Margin -24.3% -7.1% 2.7% 8.7% Yield 0.0% 0.0% 0.0% 0.0%
Depreciation & Amort (2.1) (2.0) (2.5) (2.6) OCF per share (cents) -6.7 0.5 0.3 2.2
EBIT -13.7 -9.0 0.7 9.4 Price/OCF (x) -1.7x 24.3x 38.4x 5.3x
Ebit Margin -28.6% -9.2% 0.6% 6.8% EV/ Sales 1.4x 0.8x 0.7x 0.6x
Net Interest Income (Expense) 1.0 (1.2) (1.8) (2.0) EV/EBITDA -5.9x -11.1x 26.3x 7.0x
Share of Assoc NPAT (0.0) 0.0 0.0 0.0 EV/EBIT -5.0x -8.7x 115.4x 8.9x
Liquidity & Leverage
Pre-tax profit -12.7 (10.2) (1.1) 7.4 Net Cash (Debt) $m (17.0) (26.6) (34.0) (33.1)
Income Tax Credit (Expense) 3.4 3.0 0.3 (2.2) Net Debt / Equity % 14% 27% 35% 32%
Tax Rate -26.9% -30.0% -30.0% -30.0% Net Debt / EBITDA n/a n/a 10.5x 2.7x
Minorities (share of loss) 0.5 0.0 0.0 0.0 ROA (EBIT / TAssets) % -8.6% -5.6% 0.4% 5.1%
Abnormals -3.8 -5.9 0.0 0.0 ROE (NPAT / TEquity) % -7.3% -7.2% -0.8% 5.1%
NPAT (reported incl NRIs) -12.6 -13.0 -0.7 5.2 Interest Cover (EBIT) 14.4x -7.5x 0.4x 4.7x
Adjustments 3.8 5.9 0.0 0.0 Dividend Cover n/a n/a n/a n/a
NPAT (normalised) -8.8 -7.1 -0.7 5.2
Balance Sheet Cash Flow
Cash 4.5 6.9 11.2 11.4 EBITDA -11.6 -7.0 3.2 12.1
Receivables 26.6 21.8 26.1 28.7 Chge in Working Capital -14.8 10.3 -0.1 -0.5
Inventories 22.6 19.8 19.7 20.4 Interest Received (Paid) 0.1 -1.2 -1.8 -2.0
Other 10.1 10.1 10.1 10.1 Income taxes paid 0.0 0.0 0.0 0.0
Total current assets 63.8 58.6 67.1 70.6 Other -3.5 0.0 0.0 0.0
PP&E 55.9 66.0 72.0 78.0 Operating cash flows -29.8 2.1 1.3 9.6
Investments 11.6 0.0 0.0 0.0
Intangibles 8.4 14.6 14.6 14.6 Capex -13.7 -5.0 -8.5 -8.6
Deferred tax assets 8.4 12.9 12.9 12.9 Acqns & Investments -4.6 -6.4 0.0 0.0
Other 10.7 7.6 7.6 7.6 Sale of non-current assets 1.9 0.3 0.0 0.0
Total non-current assets 94.9 101.1 107.1 113.1 Other -0.7 -0.2 -0.2 -0.2
Total Assets 158.7 159.7 174.3 183.8 Net investing cash flows -17.1 -11.3 -8.7 -8.8
Payables -14.0 -16.6 -20.7 -23.6 Equity raised (bought back) 0.0 0.0 0.0 0.0
Interest bearing liabilities - Current -21.4 -14.2 -14.2 -14.2 Dividends paid 0.0 0.0 0.0 0.0
Provisions -0.2 -0.2 -0.2 -0.2 Change in Debt 21.4 12.0 11.7 -0.6
Other 0.0 0.0 0.0 0.0 Other 0.9 0.0 0.0 0.0
Total Current Liabilities -35.7 -31.2 -35.2 -38.1 Financing cash flow 22.3 12.0 11.7 -0.6
Interest-bearing liabs - Non-current 0.0 -19.2 -30.9 -30.3 Change in Cash -24.6 2.8 4.4 0.2
Provisions -0.1 -0.1 -0.1 -0.1
Other -1.6 -11.1 -10.6 -12.5 Segment Revenue
Total Non-current Liabilities -1.6 -30.4 -41.6 -42.9 Dairy 44.7 91.8 105.3 121.1
Total Liabilities -12.2 -61.5 -76.8 -81.0 Meat 0.9 6.1 16.0 17.0
Seafood 0.7 0.4 0.3 0.3
Total Shareholders' Equity 121.3 98.2 97.4 102.8 Health 1.0 0.2 0.4 0.4
Unallocated/ Other 4.7 0.0 0.0 0.0
Total Sales + Other Rev 52.0 98.5 122.0 138.8
Segment EBIT
Interims Dairy -3.0 1.3 7.3 15.0
Year end June 1H18 2H18 1H19 2H19e Meat 0.1 -2.1 0.6 1.6
Sales 18.3 29.5 43.3 54.5 Seafood 0.4 0.4 0.3 0.3
Sales Growth (g) 84.3% 112.9% 135.9% 84.4% Health -0.8 -0.1 0.0 0.0
EBITDA -3.0 -8.6 -6.6 -0.3 Unallocated/ Other -10.3 -8.5 -7.5 -7.5
EBITDA Margin -16.2% -29.3% -15.3% -0.6% Total EBIT -13.7 -9.0 0.7 9.4
EBIT -3.9 -9.8 -7.5 -1.5 Segment Margins
Equity Share of Assocs NPAT -0.022 0.000 0.0 0.0 Dairy -6.8% 1.5% 7.0% 12.4%
NPAT (Reported incl.NRIs) -3.0 -9.6 -11.4 -1.6 Meat 6.4% -34.6% 3.8% 9.5%
NPAT (Normalised) -3.0 -5.9 -5.5 -1.6 Seafood 61.6% 100.0% 100.0% 100.0%
EPS (norm)(cents) -0.7 -1.3 -1.2 -0.4 Health -81.7% -50.0% 0.0% 0.0%
EPS growth (g) -25.7% 43% 87.3% -73% Unallocated/ Other N/a N/a N/a N/a
DPS (cents) 0.0 0.0 0.0 0.0 Total EBIT -26.3% -9.1% 0.6% 6.8%
Source: Phillip Capital estimates
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
Page 13
CONTACT INFORMATION
CEO
John Miles +61 3 8633 9838 [email protected]
Research
Wayne Sanderson +61 3 8633 9930 [email protected]
Corporate Finance
Sharon Cardy +61 2 9233 9611 [email protected]
Institutional Sales
Enzo Salvatore +61 3 8633 9924 [email protected] Chris Walker +61 3 8633 9928 [email protected]
Institutional Execution
Craig Stephens +61 3 8633 9881 [email protected]
Private Wealth
Enzo Salvatore +61 3 8633 9924 [email protected] Luke Pitrone +61 3 9618 8236 [email protected]
Ben Roper +61 7 3338 3835 [email protected] Mark Wiseman +61 3 9618 8228 [email protected]
Bo Xin +61 7 3338 3840 [email protected] Michael Cori +61 2 9233 9648 [email protected]
Chris Forte +61 3 8633 9841 [email protected] Nick Katiforis +61 3 8633 9847 [email protected]
Chris Walker +61 3 8633 9928 [email protected] Nigel Ormiston +61 7 3149 8630 [email protected]
Daniel McFarlane +61 3 8633 9917 [email protected] Patricia Harrison +61 2 9994 5505 [email protected]
Dinesh Magesan +61 7 3338 3831 [email protected] Patrick Trindade +61 3 8633 9926 [email protected]
David Dwyer +61 2 9233 9643 [email protected] Prasanna Wickramatunge +61 3 9618 8270 [email protected]
David Thang +61 3 8633 9923 [email protected] Reg Keene +61 2 9233 9603 [email protected]
Howard Elton +61 3 9618 8233 [email protected] Rob Hughes +61 3 8633 9846 [email protected]
Jim Yong +61 7 3338 3839 [email protected] Sam Sheffield +61 7 3338 3837 [email protected]
Joel Christie +61 7 3338 3834 [email protected] Shane Langham +61 7 3338 3838 [email protected]
Josh Graham +61 3 92339645 [email protected] Sue McDonald +61 3 9618 8211 [email protected]
Kate Hanrahan +61 3 8633 9909 [email protected] Xiaoming Huang +61 3 8633 9912 [email protected]
Lachlan Owen +61 3 8633 9842 [email protected]
Funds Management
Glenn Tan +61 3 8633 9905 [email protected] Monica (Mengnu) Yu +61 3 8633 9810 [email protected]
Jessica Bell +61 3 8633 9998 [email protected] Zane (Zheng) Song +61 2 9233 9640 [email protected]
Michael Laletas +61 3 8633 9925 [email protected]
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
Page 14
CONTACT INFORMATION (Regional Member Companies) SINGAPORE HONG KONG INDONESIA
Phillip Securities Pte Ltd Phillip Securities (HK) Ltd PT Phillip Securities Indonesia
Raffles City Tower 250, North Bridge Road #06-00 Singapore 179101
11/F United Centre 95 Queensway Hong Kong
Tel +852 2277 6600
ANZ Tower Level 23B, Jl Jend Sudirman Kav 33A Jakarta 10220 – Indonesia
Tel +65 6533 6001 Fax +852 2868 5307 Tel +62-21 5790 0800
Fax +65 6535 6631 www.phillip.com.hk Fax +62-21 5790 0809
www.phillip.com.sg www.phillip.co.id
THAILAND UNITED KINGDOM MALAYSIA
Phillip Securities (Thailand) Public Co. Ltd King & Shaxson Capital Limited Phillip Capital Management Sdn Bhd
15th Floor, Vorawat Building, 849 Silom Road, Silom, Bangrak, Bangkok 10500 Thailand
6th Floor, Candlewick House, 120 Cannon Street, London, EC4N 6AS
B-3-6 Block B Level 3 Megan Avenue II, No. 12, Jalan Yap Kwan Seng, 50450 Kuala Lumpur
Tel +66-2 6351700 / 22680999 Tel +44-20 7426 5950 Tel +603 2162 8841
Fax +66-2 22680921 Fax +44-20 7626 1757 Fax +603 2166 5099
www.phillip.co.th www.kingandshaxson.com www.poems.com.my
JAPAN CHINA
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Tel +86-21 5169 9200
Fax +86-21 6351 2940
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FRANCE
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UNITED STATES INDIA TURKEY
Phillip Futures Inc PhillipCapital (India) Private Limited PhillipCapital Menkul Degerler
141 W Jackson Blvd Ste 3050 The Chicago Board of Trade Building Chicago, IL 60604 USA
No. 1, C‐Block, 2nd Floor, Modern Center,
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www.phillipcapital.in www.phillipcapital.com.tr
PhillipCapital | Equity Research Beston Global Food Co Ltd (BFC)
Page 15
Recommendation Criteria
Investment View
PhillipCapital Investment View is based on an absolute 1-year total return equal to capital appreciation plus yield.
Buy Accumulate Hold Reduce Sell
>20% 10% – 20% 0% – 10% 0% to -10% >-10%
A Speculative recommendation is when a company has limited experience from which to derive a fundamental investment view.
Risk Rating
PhillipCapital has a four tier Risk Rating System consisting of: Very High, High, Medium and Low. The Risk Rating is a subjective rating based on: Management Track Record, Forecasting Risk, Industry Risk and Financial Risk including cash flow analysis.
Disclaimer/Disclosure
This publication has been prepared solely for the information of the particular person to whom it was supplied by Phillip Capital Limited (“PhillipCapital”) AFSL 246827.
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